BofA Securities Predicts Aluminum Supply Shortages Amid Limited Production Growth

In the medium term, aluminum supply is expected to remain constrained, according to analysts at BofA Securities. This is largely due to China's production cap of 45 million tonnes per year. The bank forecasts that global aluminum supply will increase at a rate of only 2.1% annually from 2023 to 2026, while demand is projected to grow by over 4%. This imbalance suggests the likelihood of sustained supply shortages in the coming years.

Capacity expansion projects outside of China, particularly in Indonesia, are unlikely to fully offset the limitations faced by Chinese production. BofA Securities estimates that these supply shortages could drive aluminum prices up to $3,250 per tonne by 2026.

The forecast is further supported by the slow development of new smelting projects worldwide. Western producers such as Alcoa and Norsk Hydro have no current plans to invest in new smelters, citing high costs and environmental concerns. Despite the anticipated price increases, new aluminum projects remain scarce, particularly in Western countries, according to BofA Securities.